More than 200,000 police fanned out across India and temporary jails were set up as the government prepared for possible Hindu-Muslim riots over one of the most divisive court cases in the nation's history.

The government has appealed for calm once a court in Uttar Pradesh state later on Thursday rules which religion owns the site of a 16th century mosque, a flashpoint that flared in 1992 and triggered some of India's worst riots that killed about 2,000 people.

Hindu and Muslim school children offer prayers for peace inside their school in Ahmedabad, India, September 23, 2010.Reuters

From the capital New Delhi to the financial hub Mumbai and towns of the northern Hindu "cow belt" along the holy Ganges river, many Indians waited with apprehension, some staying at home and stocking up with food ahead of the verdict.

Prime Minister Manmohan Singh has called the verdict one of the country's biggest security challenges, and it comes at an already tense time when India worries about its international image days before the Commonwealth Games start in New Delhi.

Commentators say the verdict is unlikely to spark widespread riots that hit Mumbai and other cities in 1992. Political parties have called for calm and there is little electoral headway to be made in egging on religious riots in post-economic reform India.

Markets shrugged off the verdict.

"There is a small risk. No doubt, investors will be cautious for a couple of days eyeing the developments," said Ambareesh Baliga, vice-president of Karvy Stock Broking.

"But it would be just a knee-jerk thing. We have had terror attacks in the past and that has not impacted foreign investments into India."

However, the verdict's outcome is a barometer of whether a rapidly globalizing India with a growing middle class and an interest in investor stability has shed some of the religious extremism that often marred its post-independence years.

Hindus wants to build a temple on the site. Muslims want the mosque rebuilt after it was demolished in 1992.

In the town of Ayodhya, Hindu temples bells rang out as priests prayed. Armed police set up checkpoints across the town, which had a deserted feel, guarded Muslim homes, a roughly 3,000 people minority in the town of 70,000 inhabitants.

Dozens of Hindus, their foreheads smeared with vermillion, gathered thousands of bricks to build a temple on the site of the mosque if the verdict went in their favor.

"If the court gives permission for re-building the mosque the entire country will rise," said Jagdish Prasad, one of the many volunteers who had demolished the Babri Mosque in 1992.

The issue haunts the ruling Congress party, a left-of-centre group with secular roots, which will have to stand by a verdict that is likely to upset one or other major voter bloc.

About 80 percent of India's 1.1 billion plus population are Hindus. Muslims represent 13 percent -- some 140 million people -- putting it behind Indonesia and Pakistan in the ranks of Muslim populations.

Wary of these two sides being provoked into fighting, the government has banned bulk mobile text messaging nationally to prevent the spread of rumours and religious extremism.

Life in Mumbai -- a city with a history of communal violence -- was normal but extra police were deployed just in case.

"Life moves on. People have moved on since 1992-93," said N.K. Palkar, a 37-year-old IT worker.

Hindus and Muslims have quarrelled for more than a century over the history of the Babri mosque in Ayodhya.

Hindus say it stands on the birthplace of their god-king Rama, and was built after the destruction of a Hindu temple by a Muslim invader in the 16th century.

The court will rule on three key issues, which ultimately will decide who owns the land: is the disputed site the birthplace of Rama, was the Babri mosque built after the demolition of a Hindu temple and was it built in accordance with the tenets of Islam?

The verdict is almost certain to be challenged in the Supreme Court and a final decision could take years.

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